1、Extending Your RunwayRAVI GUPTA&SONYA HUANG MAY 2022SEQUOIA CONFIDENTIALAgenda1.Runway reality2.How much runway do you need?3.How to extend your runway4.Questions and open discussionThis presentation will cover three main topics:First:What is your runway right now?How should you calculate it?Second:

2、How should you think about how much runway you actually need?Third:How do you actually extend your runway if you need more?Our point of view is that most founders need more than they think they do right now.One caveat:These are general principles.If you need more tactical advice specifically tailore

3、d to your company,your Sequoia board member and your community of founders are ready to help.Runway RealityCash balance monthly burnWHAT IS RUNWAY?First,the basics:What is runway?Its your cash balance divided by your monthly burn.If you have$10M in cash and$0.5M in burn,you have 20 months of runway.

4、Cash balance monthly burnWHAT IS RUNWAY?NET cash(cash-debt)But it gets a little more nuanced than that.The cleanest way to look at your cash balance is net cash,which is the cash you have on your balance sheet minus any debt youve drawn.If you have$10M in cash but youve drawn$5M in venture debt,you

5、really have$5M of net cash and you should use that number to think about your runway.We often get asked why.The reason is that debt is borrowed money.Its not yours.You owe it to a creditor.Similar to how you make personal budget decisions based on your assets minus whatever debt you owe,you should t

6、hink about your companys cash position the same way.We could dedicate an entire session to the tradeoffs of venture debt.The TLDR is that having a line is a helpful lifeline when youre facing a cash crunch,but drawing it comes at a cost.It makes it harder to raise your next round.It comes with coven